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Samples in periodicals archive:
We assume agent A has an absolute risk aversion of [[rho].
Fifth, we propose three models of DEA in the Decreasing Absolute Risk Aversion (DARA), Constant Absolute Risk Aversion (CARA), and Increasing Absolute Risk Aversion (IARA) framework to identify the best model in evaluating the efficiency of fund managers.
In this section, we consider one kind of special case called Hyperbolic Absolute Risk Aversion (HARA) case.
Second, an individual whose preferences exhibit constant absolute risk aversion purchases less and less market insurance and eventually becomes a risk taker when his endowed incomes in "good" and "bad" states are decreasing to critically low levels.
Mehra and Prescott (1985) consider an environment with complete markets and preferences that display a linear coefficient of absolute risk tolerance (ART) or hyperbolic absolute risk aversion (HARA).
The optimal income replacement rate for nonworkers therefore rises with earnings uncertainty if taxpayers' absolute risk aversion declines sufficiently slowly (or rises) with consumption.
To the extent that market insurance and self-insurance are substitutes, one may anticipate that decreasing absolute risk aversion (DARA) will play a role in the individual's incentive to invest less in self-insurance.
The definition of constant absolute risk aversion implies, therefore, that we should not expect any change in behavior across lotteries.